B. Braun and Medline Find Growth through Optimization

An estimated 90% of all hospitalized patients in the U.S. receive one or more IV fluids, according to the National Institutes of Health. Nearly 25% of these come from B. Braun, a German-based medical device company that, in partnership with Medline, distributes IV therapy and other products to health systems across the country. 

It’s a relationship that goes back over 25 years to when B. Braun was looking to move away from selling direct to the end user, and Medline was a relatively small player. Since then, both companies have grown exponentially, as seen in these numbers from 2023:

• 7,965 shipments to Medline locations for a total of 107.7 million pounds (Of these, 1,668 shipments were backhauls)
• 33+ days of inventory on hand

“We’ve been growing with Medline for quite some time and will surpass $300 million this year,” says Scott Koehler, senior director of channel management, B. Braun. “What’s stood out about the relationship is that whatever we need, Medline will find a way to make it happen as quickly as possible.”

Partnership: Reaching for High Standards

It used to be that B. Braun shipped more than 75% of the product it sold direct to customers from 36 warehouses located across the country. Motivated by customer expectations that product be delivered in no less than 24 to 48 hours, if not the same day (what Koehler calls “the Amazon mentality”), the company decided to close its warehouses and enter into an agreement with a company whose expertise is the healthcare supply chain.

Removing boxes of product from our warehouses to thousands of end-user customers is not attainable with the scope and breadth of items we sell,” says Tim Cokkinias, vice president of channel management at B. Braun.

Things like backhauls, an idea that came out of “top-to-top” meetings between senior leaders of both companies about how to get more product into Medline’s network and minimize the occurrence of backorders. “Our goal, essentially, was to tighten up the supply chain so that we can deliver product to customers on a daily basis,” Koehler says.

Backhauls: A Win-Win

Medline operates the largest owned transportation fleet of any healthcare product distributor in the U.S. Called MedTrans, the fleet continues to grow and diversify to meet the distribution needs of Medline’s portfolio of 300,000+ products.

Because Medline’s warehouse and distribution network is so vast, the company is able to swing by one of B. Braun’s three manufacturing warehouses—one in Daytona Beach, FL, one in Breinigsville, PA, and one in Ontario, CA—and transport product to its own warehouses. Instead of trucks returning to their place of origin empty, Medline is picking up product and going back with a full load to stock in its warehouses. “We win, they win, and the end user wins,” Cokkinias says.

“It was an opportunity to do something outside the norm,” says Joe McNamara, senior manager of vendor relations at Medline. “It started in Irvine, where we have two distribution centers and were already driving by their facility, and then expanded to Daytona Beach, where we saw an opportunity to help them on the East Coast. It happened organically, and it worked effortlessly. Both sides have seen a dramatic improvement in getting product to the customer in an efficient and timely manner.”

Today B. Braun is running 12 backhaul lanes with Medline and will be adding three more next quarter. “Most people only want to backhaul if it’s 20 or 30 miles,” Cokkinias says. “Because of the density and size of its network, Medline is willing to look at any and all lanes, which makes a big difference.”

Especially since COVID, the transportation industry has become very constrained and challenged, with large players exiting the market and capacity continuing to shrink. “Medline has taken away the worry that a carrier may not show up because they’re going out of business or can’t get drivers anymore,” says Mike Carney, director of North America logistics for B. Braun. “When B. Braun product goes out the door on a Medline truck, it means it should be available to the customer within 24 to 48 hours. It meets the standard for delivery set by Amazon.”

IV Solutions: Building Resiliency

Backhauling has been especially crucial in the movement of IV solutions, which are problematic in that they’re inexpensive, yet heavy and cumbersome. A $24 case can weigh as much as 50 pounds, resulting in high percent-to-ship costs. It’s also a product category plagued by shortages.

In addition to backhauling, under its Supply Resiliency Program, Medline keeps an additional 15 days of inventory on hand for more than 50 of B. Braun’s highest running fluid items. The program has significantly reduced backorder occurrences in the past year, and B. Braun is now looking to expand its resiliency arrangement with Medline to other high-use, high-velocity items that customers need on a daily basis. “What we’re doing here is focusing on the supply chain located closest to the end users,” Cokkinias explains.

Collaboration: Paving the Way for the Future

All of this and more is not to say that things were rosy right from the start. As a medical products manufacturer, Medline isn’t just a B. Braun distributor, it’s also a competitor. That took getting used to and created tension at times, everyone involved agrees.

The relationship steadily warmed and reached a turning point during COVID, when both manufacturing and the supply chain were experiencing undue constraints. “When there’s a shortage and nothing that can be done, you end up having to figure out some way to allocate the product,” Cokkinias says. “Medline excels at creating buffers against any kind of backorder or supply issue. In investing the time and resources needed to take care of the end user the best way possible, they also take care of us.” 

It’s the kind of partnership, B. Braun leaders say, that bodes well for the future of both companies. “What we learned we can achieve through collaboration during a crisis, we can continue to do every day,” Koehler says. “There are opportunities that go far beyond backhauling, and whether it’s us going to Medline or them coming to us, I know we’ll come up with the right solution together.”